U.S. Capital

Joint Bankruptcy Filing is often Rife with Problems says Iowa Bankruptcy Lawyer

May 24, 2011

Des Moines, IA (Law Firm Newswire) May 24, 2011 – While many bankruptcies start with a couple, at some point, there may be a parting of the ways. This causes problems for the process.

“In my experience as an Iowa bankruptcy lawyer, I have seen many bankruptcies start with a couple; in other words, a joint filing. However, at some point in the process, they decide they can’t stand living together anymore and a divorce is filed. While that may sound straightforward, it isn’t. In fact, things can get very messy from this point on,” said Kevin Ahrenholz, an Iowa bankruptcy lawyer.

If a couple has been in the process of bankruptcy for say, three years, there are a number of important issues that need to be taken care of before a divorce can be filed. “For instance, there are things you need to do in the bankruptcy process to make the divorce final. E.g. you must have a motion before the courts to lift the bankruptcy protection; a motion to lift the automatic stay,” Ahrenholz said. Some bankruptcy lawyers will do this and some will not and prefer the divorce lawyer take care of it.

Here is where things get sticky. If the divorce is agreed to by both parties, generally speaking, there is no problem with the judge signing the order and granting the divorce. “Divorce papers in hand, what do you do with your bankruptcy now that you no longer have bankruptcy protection? If the two of you agreed to split the payments for the bankruptcy, you’re good to go. However, if one or the other of the parties decides to not pay their share, you have a problem on your hands,” Ahrenholz said.

In order for the original bankruptcy to be completed successfully, full payment needs to be made, regardless of who is paying it. The one left holding the bag will need to be the one making the payments, as the bankruptcy court is not going to make the other party pay up. Fair?

“Not really, but there is nothing to be done about it. Call it one of the lesser-known evils of filing for bankruptcy as a couple and then wanting a divorce. Sort of like not being able to have your cake and eat it too,” said Iowa bankruptcy lawyer, Kevin Ahrenholz.

There are other options that may be viable, such as asking the non-paying spouse to sever the case or have the case dismissed and file alone. Filing alone is not a bad idea, but it will show on credit reports as two bankruptcies; one discharged successfully and one that failed. This is why speaking to an experienced Iowa bankruptcy lawyer will put things into perspective. Bankruptcies are complex and fraught with pitfalls. Make the first call for help to an Iowa bankruptcy lawyer with a good track record.

To contact an Iowa bankruptcy attorney, Iowa Chapter 7 bankruptcy attorney, or set up an appointment visit http://www.iowachapter7.com or call 1.877.888.1766.

Kevin Ahrenholz
309 Court Ave., Suite 805
Des Moines, IA 50309
Offices in Des Moines, Cedar Rapids, Waterloo, Mason City, and Vinton.